Name of Teacher: Dr Suman Solanki Course name: HRM
Semester: VI Section: A &B
Subject: Industrial relations Unit: 3
Industrial Disputes – Top 2 Methods for Dispute Settlement: With Advantages and Disadvantages
The methods for settling industrial disputes may be kept in two broad categories:
A. Without Direct State Intervention:
1. Collective Bargaining:
It will, however, be relevant here to make a mention of the steps involved in the method.
These are as follows:
i. Presentation of demands to the employer collectively by employees or their union.
ii. Negotiations on the demands which are usually based on the principle of give-and-take.
iii. Signing of a formal agreement or reaching a common understanding about the points of agreement.
iv. A possible resort to work-stoppage in the form of strikes or lock-outs in the event of failure of negotiations.
In many cases, the parties also utilise the services of a conciliator or a mediator to help in the resolution of the dispute. These services have been made available by the government in many countries, including the USA, the UK and India. The conciliator or the mediator tries to persuade the parties to break the deadlock, assuage feelings and make the parties aware of one other‟s view-points. However, the final agreement is actually reached between the parties themselves.
Although the employer and workmen themselves find out the solution of their disputes or differences, certain procedural aspects in collective bargaining increasingly have come to be regulated by legislation. These include the following – determination of the bargaining agent and its certification, recognition of representative union, certification of collective agreements and their legal enforceability; and regulation of work-stoppages and other forms of industrial action.
Advantages:
Major advantages of collective bargaining as a method of settling industrial disputes are as follows:
(i) It is based on the principle of freedom of the parties to resolve their differences on their own.
(ii) As the dispute is resolved by the parties themselves, there is a greater possibility of durable industrial peace.
(iii) The method is more appropriate for safeguarding and promoting members‟ interest in a better way than what is expected from a third party.
(iv) It has a greater measure of flexibility.
(v) Collective bargaining has contributed substantially to strengthening of trade unions and to establishing stable industrial relations.
Disadvantages:
Some of the notable drawbacks of the method are as follows:
(i) The method is based on the principle of trial by combat with all its adverse repercussions.
(ii) The final outcome in collective bargaining generally is based on the relative strength of the parties rather than on fairness and just cause.
(iii) Generally, it leads to wide diversities in labour standards even in the same industry and the locality.
(iv) There is a greater possibility of work-stoppages, often causing avoidable hardships to the consumers and people at large.
(v) The method often creates additional burden on the government‟s machineries for maintaining law and order.
2. Voluntary Arbitration:
In this method, the parties to an industrial dispute agree to refer it to a third independent and impartial person for decision. While referring the dispute to the arbitrator, the parties may agree in advance to abide by the award. In some cases, voluntary arbitration has also been accorded due recognition under labour laws such as the Industrial Disputes Act, 1947 in India and the Industrial Courts Act, 1919 of the UK.
Under the Code of Discipline in Industry (1958), the managements and unions have affirmed their faith in democratic principles with a view to ensure better discipline in industry and have bound themselves “to settle all future differences, disputes and grievances by mutual negotiations, conciliation and voluntary arbitration”.
The Gandhian technique for resolving industrial disputes has also given special importance to voluntary arbitration. In the USA, arbitration also constitutes the last step in most of the grievance procedures in both unionised and non-unionised establishments.
Advantages:
(i) Element of fairness and impartiality in decision;
(ii) Greater chances of acceptability of award;
(iii) Negation of imposition and coercive approach;
(iv) Encouragement to co-operation in industrial relations;
(v) Simple and free from cumbersome procedure.
Disadvantages:
(i) Probability of insufficient knowledge about the problem;
(ii) Uncertainties in regard to the nature of award;
(iii) Probability of rejection of the award on account of the element of voluntarism in the process;
(iv) Difficulties in locating a suitable arbitrator and obtaining his consent.
B. With Direct State Intervention:
1. Compulsory Establishment of Bipartite Committees:
In many countries, employers are statutorily required to constitute bipartite committees to resolve differences with workers on specified issues. For example, in India, the Industrial
Disputes Act, 1947 requires specified categories of employers to constitute works committee and grievance redressal committee.
The works committee is required “to promote measures for securing and preserving amity and good relations between the employer and workmen and, in order to achieve the end, to comment upon matters of their common interest or concern and endeavour to compose any material difference of opinion in respect of such matters.” [Sec. 3]. The “grievance redressal committee” is intended to settle industrial disputes connected with individual workman of the establishment.
Although, in practice, works committees have outlived their contemplated utility, in some establishments they have proved effective in resolving many contentious issues. Industrial relations laws of Australia and New Zealand also provide for the formation of some forms of joint bodies for the resolution of industrial disputes.
The main impetus to the establishment of joint bodies may be traced back to 1918 when the Whitley Commission in Great Britain suggested the formation of works committees in particular industrial establishments, district councils at the district level and joint industrial councils in organised industries. These joint bodies were, however, essentially intended to promote labour- management co-operation.
2. Compulsory Collective Bargaining:
In a few countries, employers and recognised representative unions are statutorily required to bargain collectively with each other. In the USA, for example, the Wagner Act, 1935
(National Labour Relations Act) made it an unfair labour practice on the part of the employer to refuse to bargain collectively with the recognised representative union. Later, the Taft- Hartley Act, 1947 (Labour Management Relations Act) made it an unfair labour practice on the part of both the employer and the recognised representative union to refuse to bargain with each other collectively.
As a result, a large number of disputes in the country have come to be settled through the process of collective bargaining. In many countries, laws also require certification of collective agreements to ensure their legal applicability. In India, an amendment to the
Industrial Disputes Act, in 1982 made refusal to bargain collectively in good faith both by the
employer and the recognised trade union an unfair labour practice. However, in the absence of making recognition of representative union statutorily compulsory, these clauses do not have much significance.
3. Compulsory Conciliation and Mediation:
In many countries, conciliation and mediation services have been established by the government either under labour laws or by administrative arrangements. These services generally are in two forms. First, there are conciliation services which the parties may utilise at their discretion for solving differences. Second, there is a provision of compulsory
conciliation under specified situations.
In India, the Industrial Disputes Act, 1947 provides for both types of conciliation. The parties to an industrial dispute may jointly approach the conciliation officer with a request to help the resolution of their dispute. In such a case, it is up to the conciliation officer to accept the request or decline. The normal duty of the conciliation officer is to investigate into the dispute and all matters affecting its merits and right settlement, and to do all such things which he considers appropriate for the purpose of inducing the parties to come to a fair and amicable settlement of the dispute. [Sec. 12(2)].
However, in the case of public utility service (as specified under the Act), for which a notice of strike or lock-out has been served, he is required to hold conciliation proceedings. A settlement arrived at during the course of conciliation proceeding is binding on all parties of dispute. The Act also provides for the appointment of Board of Conciliation.
In the USA and the UK, the Government has established a network of conciliation and mediation services, which the parties can make use of, if they so desire. In Australia, the Commonwealth Conciliation and Arbitration Act provides for the appointment of
commissioners to convene a compulsory conciliation conference consisting of representatives of employers and employees and presided over by a commissioner or conciliator.
Conciliation has all the major advantages and disadvantages of collective bargaining because, even in this method, the final outcome is essentially the result of negotiations between the main parties, the role of conciliator being primarily that of a moderator.
4. Adjudication or Compulsory Arbitration:
Adjudication or compulsory arbitration is a method of settling industrial disputes by an independent judicial or quasi-judicial authority appointed by the government under law.
Reference of an industrial dispute to the adjudication authority may vest in the government, or it may be made by mutual agreement between parties. The award of the adjudication authority is generally binding on the parties, but in some cases, the parties are given the option to abide by the award or not to accept it.
In India, the Industrial Disputes Act, 1947 provides for the appointment of adjudication authorities in the forms of Labour Court, Tribunal and National Tribunal. Although Labour Courts and Tribunals are appointed by both the central and state governments in respect of industrial disputes in their respective jurisdictions, the National Tribunal can be appointed only by the Central Government.
Reference of an industrial dispute to an adjudication authority can be made only by the government at its discretion, but on the joint request of the parties, the government or an authorised authority is required to make such a reference. The Act also specifies the subjects of disputes on which these authorities can give their awards. [Second and Third Schedules of the Act]. The award of an adjudication authority is binding on the parties. Provision of compulsory arbitration for settling industrial disputes has also been made on a wide scale in Australia and New Zealand.
Advantages:
The major advantages of adjudication/compulsory arbitration are as follows:
(i) It introduces the element of fairness and justice in the resolution of disputes.
(ii) It has been of substantial help in developing norms on many contentious issues such as minimum wages, bonus, dearness allowance and gratuity. Many of these norms have been incorporated in labour laws.
(iii) The provision of adjudication has also reduced the scope of work-stoppages. So long as an industrial dispute is pending before an adjudication authority or an adjudication award is in operation, strikes and lock-outs on the issues are prohibited.
(iv) It is conducive to establishing peaceful industrial relations.
(v) The recalcitrant parties cannot waver over the acceptance of the award.
Disadvantages:
The main disadvantages of the method are as follows:
(i) It contains element of authoritarian imposition by a decisions by a third party.
(ii) It negates democratic freedom of the parties to settle their differences on their own.
(iii) It generally encourages litigious atmosphere in industrial relations.
(iv) The method is generally expensive and time-consuming.
(v) In the absence of proper guidelines, the decision of the adjudicator is very often arbitrary.
(vi) The power of the government to refer an industrial dispute to an adjudication authority is likely to be influenced by political and extraneous considerations.
It was on account of these limitations of adjudication that V.V. Giri vehemently opposed the method.
Compulsory Investigation:
It is an indirect method of settling industrial disputes. Quite a few industrial disputes laws provide for the appointment of court of inquiry with the main purpose of finding out the relevant facts and issues involved in an industrial dispute and give them adequate publicity so that the pressure of public opinion may force the recalcitrant party to give up its rigid stand and agree on its rightful settlement.
Some sample questions to be practiced:
1. Define the term Industrial Relations and explain its nature and scope.
2. Explain the causes of industrial disputes and their effect on organizations.
3. Describe the functions of trade unions and state the reasons for employees joining trade unions.
4. Explain the objectives of ILO and elucidate its impact on Indian labour.
5. Elucidate the recommendations of the Reports of the National Labour Commissions.
6. Discuss the importance and procedure of collective bargaining as a method of regulating relations between employees and employers.
7. „Workers participation in management is neither feasible nor desirable under the prevailing industrial conditions in India?‟ Critically examine the statement.
8. Critically examine the effectiveness of empowerment as a tool of managing industrial relations.
9. Critically examine the effectiveness of collective bargaining in India.
10. Define quality circles and elucidate how quality circles contribute to better industrial relations.
11. Discuss the effectiveness of trade unions in fulfilling their objectives.
12. Briefly outline the various approaches to industrial relations.
13. Explain the various weapons used by labour to fight against management.
14. Explain the relevance of the World Trade Organization on industry and labour in India.
15. Describe the statutory mechanism for settlement of industrial disputes in India.
16. Critically examine empowerment as a tool available to both employees and organizations for achieving harmonious industrial relations.
17. Define the concept of Industrial Relations. Explain the importance of maintaining good industrial relations in today‟s organizations.
18. What is an industrial dispute? Explain statutory methods which are used for settling down industrial disputes in organizations.
19. Describe the growth of trade union movement in India. Explain various problems faced by trade unions.
20. Explain the objectives of World Trade Organisation (WTO) and elucidate its impact on Indian labour.
21. Explain the various weapons of labour and management which might be used in a situation of industrial conflict.
22. Discuss the concept of collective bargaining. Explain the importance of collective bargaining for employees and employers in an organization.
24. Write short notes on any three of the following:
1. Evolution of industrial Relations 2. Worker participation in management.
3. Systems approach to industrial relations.
4. International Labour Organisation (ILO).
25. Explain the contribution of various approaches to the study of industrial relations.
27. Discuss the concept of workers participation in management and how it will contribute in better decision making.
28. Briefly explain the structure of Trade Unions and also discuss the functions performed by them in an organization.
29. Elucidate the recommendations of the Reports of the National Labour Commissions.
30. Explain the relevance of the International Labour Organization (ILO) on industry and labour in India.
31. Describe the essentials of good negotiations that contribute to the success of collective bargaining and trade unions.
32. Write short notes on any three of the following:
1. Empowerment of Employees.
2. Parties to industrial relations.
3. World Trade Organisation (WTO).
4. Contractual labour